Tapping the 'Bridge to Luxury E-commerce Market' in India

The Fashion and Lifestyle sector is experiencing an upward movement in India and is considered as one of the most diverse and energetic ones. Currently, the market in India is estimated at $80 billion, growing at a CAGR of 10%, in which online fashion contributes around 7-8% of the total market, which is approximately $6 billion. The premium apparel and bridge to luxury brands are witnessing impressive growth with the introduction of international brands (direct and indirect) in the market. The driving factors behind this growth are changing consumer preferences, brand awareness, increase in disposable income, and a rise in the tech-savvy millennial population. By 2020, the expected online market space will reach $12-$14 billion with the overall retail market at $100 billion and the premium and the super-premium segment will command a 20% share of the overall fashion e-commerce market. The exponential growth rate of this segment is offering brands an opportunity to tap the bridge to luxury segment and reap the benefits.

Along with digitisation, e-commerce is also on the rise with improvements in logistics, infrastructure and convenient payment channels further accelerating its adoption. With plenty of options available just at one click, today’s fashion consumers are well-informed and on-trend. However, to create a niche in India, one needs to think 'India' and focus on the local needs for relevancy. As a growing economy, our country has the largest youth population in the world. Their purchase decisions are often influenced by online research on current trends, product quality and company’s production ethic. With the growing brand and quality awareness, a significant shift in demand for aspirational luxury products is being witnessed.

Indians have been well acquainted with luxury, and international luxury brands are now offering affordable luxury products/ introductory products to attract the millennial segment from emerging markets in addition to the seasoned luxury buyers. When it comes to premium luxury, it is something that everyone wants to indulge in, but not everyone can afford it. As per the recent ASSOCHAM report, Indian luxury market is at a very nascent stage and has reached a revenue total of 23.8 billion US dollars and is expected to grow in coming years. Also, as per the report, the rise in the purchasing power of consumers residing in tier 2 & 3 cities has led many fashion brands to foray into these markets. Premium brands are scaling down to find a place in this segment, targeting the aspiring customers and offering them products at an attractive price point. People who are aware and seek brand value, but are willing to shell out lesser than they would have on a luxury brand, are the ones who are making for an attractive market for the entry-level products from these brands.

Millennials are disrupting the luxury market not just in India but globally. The rising generation has presented a unique challenge as well an opportunity to the luxury marketer and has pushed the brands to address the shift in luxury consumer behaviour. Brands, especially e-commerce players offering luxury and premium products are now changing their goals of marketing to inspire and influence customers, and they are aligning their offerings with the needs and demands of the consumers. Players in this segment have taken cognizance of the shifting landscape of this market and evolved from a discounted portal to a more exclusive and sophisticated portal. Here, the internet boom and the penetration of social media has played an essential role in creating awareness among existing buyers of premium products and a growing number of aspirants as well. Consumers are regularly fetching the first source of information from social media, and many seek personalised, targeted promotions like emails on the new collection launch and discounts from the brands they wish to own.

Today, e-commerce is a significant channel for fashion and is marked by a spark of growth in buyers, both new and mature. In the constantly evolving omnichannel ecosystem for luxury brands, the online channel broadens the customer base and reach for a brand. Even global luxury fashion brands are partnering with premium e-retailers & bridge to luxury brands to leverage the growing demand. Global luxury brands and multi brand outlets are already rethinking their digital strategy which is evident from the rapid growth in luxury ecommerce compared to the traditional retail. A combined research carried out by Euromonitor, Forrester and McKinsey Company projects the digital share of the global luxury market to be at 20% by the year 2025.

In India, social media has flourished significantly, with shoppers spending a considerable amount of time online, and 50 to 60 million consumers already buying fashion online. By 2020, this number is expected to double. A recent report published byBCG and Facebook estimates that 70% of the branded apparel will be digitally influenced.

India’s luxury spending is at par with the UAE, far ahead of Turkey, Thailand, and Argentina, and growing faster than Singapore and Australia. Favourable trade and FDI policies and the penetration of organised sector into the depths of our country are amongst the other significant contributors towards making India one of the most promising markets for investors and international brands.

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